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Cole Schotz’s Bankruptcy & Corporate Restructuring practice is a distinguished and nationally renowned full-service group that is regularly cited in Chambers USA: America’s Leading Lawyers for Business and lauded for a track record that boasts unparalleled effectiveness, success and value.
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Our Blockchain Technology and Digital Currency Group has closely monitored the evolving legal and regulatory landscape surrounding the advent of blockchain technology. We are experienced and ready to assist companies and applications utilizing public blockchains and private ledgers in every stage of their businesses, including: + Read more

Cole Schotz’s multi-faceted practice is uniquely well-suited for investors and entrepreneurs alike with respect to the emerging cannabis industry and the opportunities and challenges it presents. + Read more

Cole Schotz provides comprehensive construction related services, for every phase of construction projects, both public and private, throughout the country. Our services include the preparation and negotiation of complex construction contracts, advising on requisite insurance coverage, surety and bonding needs, labor laws and union participation, and company formation and ownership agreements, and providing counseling on contract administration, lien claims, risk management, and environmental and OSHA compliance.
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Cole Schotz provides practical advice regarding all business matters, from simple governance issues to complex corporate transactions. We assist companies in achieving their short- and long-term business objectives, whether they are public corporations, closely held and family owned businesses, or sole proprietorships. + Read more

We value our close working relationship with clients and the trust they place in us to address and resolve complicated and often sensitive employment issues. Our attorneys provide preventive counseling and guidance to both large and small employers on a wide range of compliance issues and evolving statutory and common law requirements. This includes those related to wrongful discharge, discrimination, retaliation, sexual and other forms of harassment, family and medical leaves of absence, disability, substance abuse, wage and hour, and restrictive covenant trade secret and other related issues.
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Our Environmental Law department is vibrant, growing and ideally situated to assist those who buy, sell or conduct business on commercial or industrial property where environmental risks can create significant challenges to business ventures.
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The Cole Schotz Healthcare Group, led by Paul W. Kim, Esq., a former employee of the Centers for Medicare and Medicaid Services, represents a variety of individuals and corporations in the healthcare industry including:
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If you create it, we can help you protect it, enforce it, and monetize it. For years, the Intellectual Property team at Cole Schotz has been partnering with clients to provide superior quality service at unmatched value. Our recipe includes superior quality work product, aggressive advocacy, business-focused counseling, creativity, responsiveness, and integrity. + Read more

Utilizing their breadth of experience in both thriving and distressed economic environments, the members of our Real Estate Special Opportunities Group have the practical experience and depth to offer clients flexible and creative solutions to a multitude of complex real estate transactions.
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In today’s ultra-competitive food and beverage marketplace, where guests are sophisticated and business challenges come from both expected and unexpected places, it is imperative that foodie entrepreneurs, restaurant groups, celebrity chefs, craft brewers, hotel owners and investors engage a strong team of advisors to limit bumps along the road to success.
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The players in the world of sports go far beyond those performing on game day. Whether you are an athlete, sports-related organization or supplier to the industry, our experienced team is ready to assist. + Read more

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The Cole Schotz Tax, Trusts & Estates attorneys counsel individuals and businesses in a range of tax and estate planning strategies. Our clients include owners of family businesses where succession planning and asset protection are linked, and individuals of substantial means who wish to take advantage of sophisticated tax planning techniques to retain and build their wealth for future generations.
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MEDIA

Thinking About Selling?

In preparing to sell a business, owners routinely plan to: fix up a plant or property, clean up the company’s books and records, or reduce unwanted inventory. But one area that business owners routinely neglect is tax and estate planning in preparation for a sale. All too often, a buyer has been found, but there is a significant tax liability that could have been reduced or avoided had the business owner or investment banker planned more thoroughly. With time to plan for an S election, or transferring shares out of the taxable estate, business owners can achieve much better tax results.

This article will discuss in summary form certain tax-planning steps that owners of closely held businesses should consider in preparing to sell a business.

1. Selection for pass-through taxation. A sale of C corporation assets typically causes two levels of taxation – a tax on gain at the corporate level and a second tax on distributions to shareholders. Electing S corporation status is a relatively easy but important step for business owners seeking to mitigate this. An S corporation is a “pass-through” entity, so all items of income, deduction, gain and loss pass through directly to the shareholder’s tax return and thus are only taxed once. Following an S election, any built-in gains will be subject to tax for 10 years following the election. However, a business owner can obtain an appraisal to help establish the value of the corporation on the day of the S election, and any appreciation after that date will not be subject to double tax.

2. Recapitalization to voting and non-voting shares. Many business owners seek to reduce their exposure to gift and estate taxes which currently reach 45% of the owner’s taxable estate. One of the first steps in transfer tax planning often is a recapitalization of the company shares to two classes – one with voting rights and one without. The business owner may then transfer non-voting shares to members of his or her family, trusts for their benefit, or other entities. Typically, the transfer of a non-voting, non-marketable interest is valued at a significant discount -- for example, 30% (confirmed by an appraisal). In some cases, the business owner may also wish to transfer voting shares.

3. Gifting program. Under current law, an individual may give away up to $12,000 per beneficiary per year ($24,000 for a married couple) without incurring gift tax. Thus, a business owner can give away discounted, non-voting shares in the business on an annual basis. As a further step, the business owner may choose to use his or her full gift tax exemption amount ($1 million in 2007) to make gifts of shares in the company. These steps need to be carried out carefully as there are risks that the gifted property could still be included in the owner’s taxable estate. But a gifting program can achieve significant tax savings.

4. Sale of company shares to a trust. A business owner also may consider selling shares in the business to a trust for the benefit of family members in exchange for a promissory note. This type of sale has the effect of “freezing” the value of the company in the owner’s estate (at the value of the note received), while allowing all appreciation in the company to accumulate estate-tax free in the trust.

Before taking any of the steps outlined above, a business owner should discuss them with his team of advisors. Most importantly, the business owner and his team should address these issues as early as possible.

DISCLAIMER

The materials on this site have been prepared by Cole Schotz P.C. for general informational purposes only and are not intended to constitute legal advice. Viewers should not act upon this information without seeking professional counsel on the specific facts and circumstances in question from an attorney licensed in their jurisdiction. Use of this site does not create an attorney-client relationship between the user and Cole Schotz or any lawyer(s) within the firm. Any information sent to Cole Schotz or its lawyers through this site will not be treated as confidential and is not protected by the attorney-client privilege.